Consider the Following Probability Distribution for Stocks a and B

question 32

Multiple Choice

Consider the following probability distribution for stocks A and B: $\begin{array}{cccc}\text { State } & \text { Probability } & \text { Return on Stock A}&\text {Return on Stock B } \\1 & 0.10 & 10 \% & 8 \% \\2 & 0.20 & 13\% & 7\% \\3 & 0.20 & 12\% & 6\% \\4 & 0.30 & 14\% & 9\% \\5 & 0.20 & 15\% & 8 \%\end{array}$
If you invest 40% of your money in A and 60% in B, what would be your portfolio's expected rate of return and standard deviation?

• A) 9.9%; 3%
• B) 9.9%; 1.1%
• C) 11%; 1.1%
• D) 11%; 3%
• E) None of the options are correct.

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Definitions:

Stimulus Generalization

A psychological phenomenon in which a response that has been conditioned for one stimulus is evoked by another, similar stimulus.

Response Attenuation

The reduced reaction to a stimulus over time, typically as a result of repeated exposure.

Stimulus Generalization

The process by which a conditioned response is triggered by stimuli that are similar but not identical to the original conditioned stimulus.

Negative Avoidance

A learning process where actions are taken to prevent an unpleasant outcome or stimuli.